at the Joint Annual Discussion

Australia would like to add its congratulations to Mr Köhler on
his appointment as Managing Director of the IMF and to Mr Wolfensohn on
his reappointment as President of the World Bank Group.

And on behalf of Australia, let me add my thanks to the people of the
Czech Republic for hosting this years annual meetings. Prague, a symbol
of the achievements of the transition economies, is a most fitting site
for the first annual meetings in the new millenium.

This is an exciting time.

We have the ability to accelerate growth in living standards and reduce
poverty around the world. However, the main challenge ahead for the international
community is to ensure that all people in both developed and developing
countries reap the benefits of the global economy. While openness to the
global economy and integration in it is necessary for real human progress,
it is not in itself sufficient to guarantee that progress will be secure
and stable.

At this point, let me join other delegates in deploring the violence
we witnessed yesterday. Violent protesters were not interested in dialogue
nor were they interested in any constructive solutions to the relief of
poverty. Some comments made outside these meetings would suggest that
globalisation is the source of almost every problem currently prevailing
in the world. But the wealth of evidence suggests otherwise. Experience
of the past 50 years has demonstrated that economies which have increasingly
opened themselves up to the world economy have achieved some of the fastest
rates of economic growth. And economic growth is the best poverty-busting
policy.

But recent financial crises show that participation in the global economy
is not without risks. Sustained growth requires sound domestic policies
and institutions, better lending and investment assessments and better
performance from the international institutions.

And we should not forget the responsibility of the international community.
Lowering trade barriers is one of the major contributions that the developed
economies can make to help boost the prospects of the poorest economies.

The outlook of continued strong world economic growth is welcome. But
there are risks to this outlook. We have witnessed a significant misalignment
between the major currencies. We should remember that small currencies
can be destabilised and confidence in them weakened when they get caught
in the cross-fire of substantial shifts in the currencies of the majors.

The sharp rise in world oil prices is clearly another significant risk
to the world economic oultook. In the light of rising world demand, it
is imperative that restrictions on the supply of oil are removed and this
is an area where we need a concerted effort by the international community.
We welcome the decision by the US to release some of its strategic oil
reserves. We also need more intensive study of how greater stability at
lower prices can be achieved in oil markets (not just in the short run
but also in the more medium term). The Fund should work on these issues.

The current healthy economic environment in Australia reflects the major
reforms which have brought our economic and financial policies and institutions
up to worlds best practice. Most recently, we have completely overhauled
our tax system to ensure that it is internationally competitive and able
to meet the demands of the twenty first century.

As reform has made the Australian economy more competitive, work practices
have improved and businesses have sought ways to raise productivity, including
through profitable applications of the new information and communications
technologies. This sound mix of macroeconomic policies and an ongoing
microeconomic reform agenda has created a more flexible and resilient
economy. The benefits of these reforms are evident in Australias record
of sustained strong economic growth 13 consecutive quarters of through
the year growth at or above 4 per cent and low inflation outcomes.

Australia has embraced key elements of the so-called "new economy".
We have one of the highest percentages of the total population with internet
access. Businesses are also looking to embrace new information and communication
technologies. The key attributes of a new economy cannot be assessed simply
in terms of the production of information and communications technology,
but rather the ability to apply developments in new technology so as to
increase productivity and an economys overall output. In this regard
Australia has correctly been identified as one of the fast-growth new
economies of the 1990s.

The Funds Agenda

Another crisis similar to the Asian financial crisis is always possible.
It is up to us to ensure that the likelihood of further crises is minimised
and that, should a crisis occur, its severity is limited.

We welcome the expeditious completion of the review of Fund facilities,
with the package of reforms recently agreed by the Executive Board.

With that agreement in place, the Fund should now refocus its energies
on those features which ultimately lead to successful programs. Namely,
program design, ownership and conditionality.

Australia also acknowledges the progress made to date in developing a
framework for private sector involvement in crisis prevention and resolution.
We urge the Fund to continue its work in this area, particularly in the
area of tools for involving the private sector.

We welcome efforts to continually strengthen Fund surveillance, including
in assessing financial vulnerabilities. We believe that Fund surveillance
should continue to focus on core macroeconomic and financial issues.

We have strongly supported the development of standards and codes and
efforts to improve transparency. But the Fund must balance its role as
confidential adviser with the push for enhanced transparency. As part
of ongoing efforts to enhance the transparency of the Funds operations,
Australia is pleased to see that the Independent Evaluation Office will
be a reality in the near future.

Representation at the Fund needs to more closely reflect members relative
economic standing, although we would not like to see the representation
of smaller, developing countries reduced. We support a simplification
of the current quota formula system, which lacks both logic and transparency,
and look forward to this issue being progressed.

The World Bank

The Bank has been reviewing and reassessing its agenda in the light of
changing circumstances. It has made great progress in this regard over
the past five years but there continue to be many new challenges and we
encourage it to press ahead. The Bank should emphasise a strategic approach
in the development of its comparative advantage relative to other lending
institutions.

I particularly mention the principles of the Comprehensive Development
Framework and their application through Poverty Reduction Strategy Papers,
which provide a sound basis for the Banks country work. The challenge
is to ensure that the demands made on borrowing countries are not excessive
and are within countries often limited capacity.

Joint Fund-Bank Issues

To date, 10 countries have reached their decision points under the
enhanced HIPC Initiative. Efforts are being redoubled to get a further
10 countries to this point by the end of the year.

While this is welcome progress, it is no cause for complacency. The successful
implementation of the enhanced Initiative will require sustained effort
over a number of years. We urge the World Bank and IMF to maintain their
current efforts and continue to collaborate closely. For their part, potential
HIPC beneficiaries must address factors preventing early delivery of relief
including, in some cases, destabilising conflicts. If not supported by
stable and well-functioning policies and institutions, the proceeds of
relief will be quickly squandered.

Debt relief must of course be funded. We encourage all who have pledged
contributions to the Trust Funds administered by the World Bank and IMF
to honour them as soon as possible. We also underline the importance of
full participation of all creditors in the Initiative, and encourage the
Bank and the Fund to persist in their efforts to bring this about.

Debt relief provides one example of the importance of close co-operation
between the IMF and World Bank. We welcome strongly the joint statement
issued by President Wolfensohn and Managing Director Köhler clarifying
the respective roles of the Bank and the Fund and outlining their vision
for an "enhanced partnership" going forward. As they point out, the two
institutions share the same broad objective. The challenge now will be
to translate the spirit of the joint statement into better collaboration
at the working level. While HIPC is a good example of early progress,
we will be looking for further gains elsewhere, including the design and
co-ordination of conditionality and co-operation in crisis situations.

Conclusion

Mr Chairman, Australians are by their nature optimistic people. We are
also realists. We know that continued strong growth of the Australian
economy requires the maintenance of sound economic policies. We also recognise
the responsibility of the international community, including the important
role of the IMF and World Bank, to ensure that the full benefits of globalisation
are shared by all nations.